Small Businesses Are Not Always Exempt From Workers’ Compensation Rules


June 10, 2017

The Georgia Workers' Compensation Act ("the Act") includes an exemption which relieves small businesses of the burden of carrying workers' compensation insurance. The exemption may be found at OCGA §34-9-2 (a) (2) and excludes businesses that do not regularly employ three people within the state. However, the statute authorizes workers and employers to waive that exemption and voluntarily agree to be bound by the Act. Some employers may try to avail themselves to the exemption even if they do not otherwise qualify.

The issue came before the Georgia Court of Appeals recently. In the case of Wills d/b/a Wills Construction vs. Clay County, a business owner won a bid to repair a gymnasium owned and operated by Clay County. The parties arrived at a written agreement before work commenced, requiring the construction contractor to provide workers' compensation insurance coverage if the contractor hired other workers to assist him with project. The contractor objected to that obligation by claiming that the law did not apply to his situation. Representatives of Clay County removed that clause from the contract.

The contractor hired a person of whom he employed on several occasions in the past over the previous six or seven years. The two men agreed that if the worker suffered job-related injuries, then the worker would pay for the medical costs without the benefit of workers' compensation coverage. Subsequently, the contractor hired two others to help him perform the work on the Clay County gymnasium. While the contractor and his crew were working on the gymnasium, the first man  fell off of the roof, suffering a leg injury, which disabled him.

The injured man pursued legal relief by filing a workers' compensation claim with the Georgia Board of Workers' Compensation. The Board allowed the claim as to the contractor but not the county. The contractor exhausted his administrative appeals and eventually a superior court judge affirmed the ruling. The contractor appealed the decision of the superior court to the Georgia Court of Appeals.

The most significant question the Court of Appeals had to decide was whether the contractor was exempt from carrying workers' compensation insurance. To qualify for the statutory exemption, the contractor had the obligation to prove that his employees, including the man who was injured, were not "regularly in service." Georgia courts have struggled to define the phrase "regularly in service."  Essentially, the phrase means that the business is more than intermittently in operation.

The Court of Appeals ruled that the contractor's business was regularly in service. The evidence at the hearing before the Board revealed that the contractor worked on two or three construction projects per year. Then, as business increased, the contractor hired as many as four additional employees.

Georgia Courts of Appeal have had the opportunity to review cases like this before and have ruled that employers are responsible for workers' compensation insurance when the employer hires additional employees as business increases and the employees could be expected to work for a reasonably definite amount of time in pursuit of the job for which they were hired. After applying the principles of Georgia law, the court rules that contract was liable to compensate his employee for the injury he suffered.

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Please Note:
Many of our blog articles discuss the law. All information provided about the law is very general in nature and should not be relied upon as legal advice. Every situation is different, and should be analyzed by a lawyer who can provide individualized advice based on the facts involved in your unique situation, and a consideration of all of the nuances of the statutes and case law that apply at the time.